The initial public offering of Fusion Micro Finance has witnessed muted response from investors so far as the offer has garnered bids for 35.09 lakh shares against IPO size of 2.13 crore shares, subscribing just 16 percent on November 3, the second day of bidding.
Retail investors have bought 19 percent shares of the allotted quota, while non-institutional investors have put in bids for 30 percent shares of the portion set aside for them.
Qualified institutional buyers have subscribed for 1,120 shares against the reserved portion of 59.56 lakh shares.
The second largest player in micro finance sector intends to raise more than Rs 1,100 crore via public issue, at the upper end of price band of Rs 350-368 per share.
The offer comprises a fresh issuance of shares worth Rs 600 crore by the company and an offer for sale of 1.36 crore shares by selling shareholders.
The company will utilize the funds to augment its capital base. The issue was opened on November 2.
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Fusion Micro Finance caters to financial needs of women entrepreneurs from economically and socially deprived section of the society. The company has a network of 966 branches and 9,262 employees spanning 377 districts in 19 states and union territories in India, as of June 2022.
It runs on a joint liability group-lending model, in which a small number of women form a group, typically comprising five to seven members and guarantee each others' loans.
Based on FY22 annualized earnings, the company is valued at 2.8x price-to-book-value.
Fusion has optimized cost of funds, liquidity requirements and capital management over the years, in challenging market conditions, led by prudent liability management, ability to secure sufficient and diversified borrowings on competitive terms and improving credit ratings, Arafat Saiyed of Reliance Securities said.
In view of well diversified and extensive pan-India presence, proven execution capabilities with strong rural focus, a knack for quick adoption of technology access to capital, effective asset liability management and valuation comfort, Arafat Saiyed has recommended a ‘subscribe’ to the issue.
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